Michigan Car Insurance Reform: How New No-Fault Law Changes Will Affect Drivers
Insurance coverage can be very confusing to understand, but it’s also something all Michigan drivers need to deal with. Recently, a series of changes to Michigan’s no-fault insurance law started going into effect which made some significant updates to a law that had been in place since the 1970s. So, what do these changes mean for Michigan drivers? Here are some of the most important things you should know.
Changes to PIP Insurance Coverage
The biggest change Michigan drivers will see involves the Personal Injury Protection (PIP) part of their auto insurance coverage. PIP coverage is what takes care of things like your medical bills and lost wages if you are injured in a car crash. Under the old no-fault law, all Michigan drivers were required to have unlimited PIP coverage and if someone was injured in a car accident, they would go through their own insurance to get their bills taken care of. The unlimited amount of coverage meant that everyone would be able to have their medical expenses covered, regardless if they sustained an injury that could fully heal with proper treatment or serious injuries that require lifelong care.
Under the new law, Michigan drivers now have the ability to choose the level of PIP coverage they have. Basically, there are three levels of PIP coverage to choose from: unlimited, $500,000 per person per accident, and $250,000 per person per accident. There are also three other coverage options to choose from if you meet certain criteria. For example, you could choose PIP coverage up to $50,000 if you are enrolled in Medicaid and other members of your household have their own Michigan auto insurance policy or a qualifying health insurance policy. In some cases, people can opt out of PIP coverage all together.
If you choose unlimited PIP coverage, you will continue having the same level of coverage you did before the law changed. If you choose a lower level of coverage and have car accident injuries that exceed your PIP coverage, you could file a lawsuit against the at-fault driver to recover the damages not covered by PIP.
Other Changes for Michigan Car Accident Victims
Not all types of damages associated with a car accident are tied to a tangible financial value. Under the new law, accident victims will still be able to collect pain and suffering damages, but the injury needs to be considered a “serious impairment,” meaning the following criteria applies:
The injury is objectively manifested, meaning it can be observed through things like symptoms
The injury impairs an important bodily function
The injury affects a person’s ability to live their life as they normally would
Effective July 1, 2021, another change will go into effect which impacts accident victims who receive in-home attendant care. If that attendant care is being provided by a family member, insurance carriers will not be required to pay for more than 56 hours of care per week.
If your auto insurance requires you to pay a deductible regardless of whether or not you were at fault for an accident, you can recover the cost of your deductible by making a mini-tort claim against the at-fault driver’s insurance. The maximum mini-tort recovery was $1,000 under the old law, but the new law increased this limit to $3,000.
Financial Savings for Consumers
Michigan notoriously had some of the highest auto insurance premiums in the country, so when changes to the law were announced, one of the biggest questions people had was, “How much will I save?” The answer to this depends on several different things.
PIP coverage is a big part of your auto insurance premium, so the additional levels of coverage people can choose from will influence their savings. The lower your PIP coverage is, the more money you’ll be able to save. But at the same time, a lower insurance premium could come at the cost of being less protected in the event of a car accident. Regardless of which level of PIP coverage you have, insurers are required to provide some degree of financial savings for eight years.
Sometimes, insurance companies use factors unrelated to a person’s driving history or habits when determining premiums. The recent reforms to Michigan’s no-fault law prohibits insurers from using non-driving factors, like zip code, marital status, and credit scores, when determining premiums.
Have More Questions About Michigan No-Fault Law?
Michigan’s reformed no-fault law involved many different changes and these are just a few of the changes that most directly impact drivers. Visit our Michigan No-Fault Law page for more information about the new law. If you have any questions about the law or need more help with choosing your auto insurance coverage, Goodwin & Scieszka is here to help. Contact us and we can answer your questions and give you more personalized assistance.